Your cookies are sold in a perfectly competitive market with a market price of $5 per dozen.

• Calculate the profit-maximizing quantity of dozens of cookies for your cookies.
• Calculate the level of profit earned at that level of production.
• Now repeat the previous steps but with the $15 fixed costs calculations.
• Compare the results.

Now assume you have a monopoly with your cookies with the following demand curve: $10 per dozen for one dozen, $9 per dozen for two dozen, $8 per dozen for three dozen, $7 per dozen for four dozen, $6 per dozen for five dozen, $5 per dozen for six dozen, $4 per dozen for seven dozen, $3 per dozen for eight dozen, $2 per dozen for nine dozen, and $1 per dozen for ten dozen. Start with the costs calculated with the $30 fixed costs.

• Calculate the profit-maximizing quantity of dozens of cookies for your cookies.
• Calculate the level of profit earned at that level of production.
• Now repeat the previous steps but with the $15 fixed costs calculations.
• Compare the monopoly results.

Bring all your results together.

• Compare the perfect competition and monopoly results.

cost calculations module 4 below

As the average variable cost is fixed, for all dozens average variable cost=7.35

Also Marginal cost is fixed=7.35

Average fixed cost=30/q

Average total cost=7.35+30/q

One 16 oz. box of sugar = $1.79

One 12 oz. bag of chocolate chips = $1.99

One 2 lb. bag of flour = $1.99

One dozen eggs = $1.29

A fixed cost of $30 to rent a kitchen with an oven for a day

1 dozen:

Average total cost=37.35

Average variable cost=7.35

Average fixed cost=30

2 dozen:

Average total cost=22.35

Average variable cost=14.706/2=7.35

Average fixed cost=15

Marginal cost=7.35

3 dozen:

Average total cost=17.35

Average variable cost=7.35

Average fixed cost=10

Marginal cost=7.35

4 dozen:

Average total cost=14.85

Average variable cost=7.35

Average fixed cost=7.5

Marginal cost=7.35

5 dozen:

Average total cost=13.35

Average variable cost=7.35

Average fixed cost=6

Marginal cost=7.35

6 dozen:

Average total cost=12.35

Average variable cost=7.35

Average fixed cost=5

Marginal cost=7.35

7 dozen:

Average total cost=11.63

Average variable cost=7.35

Average fixed cost=4.28

Marginal cost=7.35

8 dozen:

Average total cost=11.1

Average variable cost=7.35

Average fixed cost=3.75

Marginal cost=7.35

9 dozen:

Average total cost=10.68

Average variable cost=7.35

Average fixed cost=3.33

Marginal cost=7.35

10 dozen:

Average total cost=10.35

Average variable cost=7.35

Average fixed cost=3

Marginal cost=7.35